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Albertans paying the regulated rate option (RRO) for their electricity can expect the surge in summer power prices to continue with the default rate poised to rise to a new record high next week.
The RRO in Edmonton via Epcor is set to rise to 32.5 cents per kilowatt hour (kWh) in August from 28 cents per kWh in July. Similarly, the rate in Calgary via Enmax is set to rise to 31.9 cents per kWh next month from 27.6 cents per kWh this month.
Those increases are pending approval by the Alberta Utilities Commission. If approved, they would represent new record highs in both areas and could further drive up the power bills of Albertans.
The RRO is a floating electricity contract that sees consumers pay a rate for power that changes monthly based on the market price of electricity, rather than being locked into a fixed price.
It’s the default option for consumers who don’t sign on with a competitive retailer and is also commonly used by consumers with barriers such as poor credit scores.
Albertans on the RRO faced record rates near the start of the year but weren’t charged more that 13.5 cents per kWh due to a three-month government price deferral as part of a series of affordability measures.
That plan was built on a $200-million government loan to utility companies to cover the difference between the cap and RRO prices.
RRO customers have to repay that money through December 2024. In June, the deferral accounted for 2.7 cents of the rate, but that number could rise in subsequent months if consumers switch away from the RRO and get on to fixed plans, leaving a smaller base of RRO customers.
About one-in-three Alberta customers are on the RRO, according to the Market Surveillance Administrator.
Earlier this month, Alberta Affordability and Utilities Minister Nathan Neudorf was tasked with “exploring the potential phase out of the regulated rate option” in a mandate letter from Premier Danielle Smith.
He told Postmedia then that vulnerable Albertans need to have access to less volatile alternatives to the RRO, adding it will likely be renamed and become more limited on who is taking part in it.
In a statement Thursday, his office stated it was working with industry to review the RRO and identify longer-term solutions, calling it a “top priority.”
“We’re focused on a more competitive system and the ways to reduce and manage future costs, including phasing out the regulated rate option.”
Opposition utilities critic Nagwan Al-Guneid told Postmedia Thursday that another increase would only pile on the rising cost of living for Albertans.
“People are hurting right now,” she said. “We need short-term caps and emergency relief for people, but we need the government to get to work and come up with that long-term thinking and fix the system as a whole.”
She said the province needs to develop a greener, more reliable power grid by better harnessing and improving its wind and solar power and storage infrastructure while reducing red tape around those projects to encourage more private investment.
“A more diversified grid is a more affordable grid,” she said. “We need more low-cost energy supply to get into our grid.”
